Manmohan Singh: Demonetisation caused unemployment, spike in Chinese imports
Ahmedabad: Former Prime Minister Manmohan Singh on Tuesday hit out at the National Democratic Alliance (NDA) government’s record on economic growth, saying that for it to now measure up to the 10-year average of the United Progressive Alliance (UPA) government led by him, the economy will have to grow at 10.6% in the NDA’s fifth year in power.
“I would be happy if this were to happen, but frankly I do not think it will,” Singh told reporters in Ahmedabad. The economist also slammed the government on demonetisation and the implementation of the goods and services tax (GST), saying they had contributed to a jump in Chinese imports and unemployment in India.
Singh said that it was worrying that growth has been falling for several quarters, sliding to 5.7% in the first quarter of 2017-18.
“What has happened to the growth rate of the economy since NDA came to power? In the ten years of UPA I and II, when I was the prime minister we produced 7.8% GDP growth on average. This includes the slowdown in the two years of our government. When the present government took over, they said they would take growth to 8 to 10%. Modiji has so far produced an average of only 7.3% in the first three years,” Singh said.
The former prime minister brushed aside claims that nothing had been done by Congress-led governments in the 70 years before Narendra Modi became Prime Minister, giving examples of how life expectancy has improved from 31 years to 71 years and literacy from 18% to 76% during this period.
His remarks come ahead of assembly elections in Gujarat that are scheduled to be held on 9 and 14 December, where the ruling Bharatiya Janata Party (BJP) and Congress are vying for power.
“I must point out that while denigrating the past, the prime minister also tends to exaggerate what he will do in the future. He was recently quoted in the press as saying that India will become a developed country by 2022. I would be the happiest person in the world if he can deliver that. But is he really aware of what it implies?” Singh said.
To achieve this, he said, that the country’s per capita income of $5,000 has to increase five-fold in five years—and that would only equal the per capita income of Greece, which is at the lower end of developed countries.
“To increase our income five-fold in five years, we would have to achieve a growth rate of 35% per year. No country has ever done this. Is Modiji promising he will do that?” the former prime minister asked.
Singh denied Modi’s claim, made in Gujarat last month, that as chief minister of Gujarat he had several times tried to push for speedy completion of the Narmada dam project with then Prime Minister Singh but that there had been no progress.
Singh said that Modi had never met him as Gujarat CM to discuss the Narmada issue.
On the issue of demonetisation and GST, Singh said that the decisions taken by the NDA government have caused much disruption to the economy and affected farmers and small enterprises.
Demonetisation he said is an ill thought-out move with negative effects while in the case of GST it is its implementation that is causing problems.
“The government says that they will pursue all those who made large deposits in banks after demonetisation. In other words the taxmen will be unleashed on these individuals. They will have to prove their innocence,” he said, adding that demonetisation, poor implementation of GST and the rise of tax terrorism under the guise of controlling corruption have seriously damaged the investment climate for small businesses.
On agricultural growth and reforms he said that Modi’s slogan of doubling of farm income in five years requires an annual growth rate of farm incomes of 14%.
“I do not know if doubling was meant to include the effects of inflation. If he was factoring in inflation at say 4%, it still requires a growth rate of 10% in real terms in farm income. I have seen no programme that would achieve such a growth for the country’s farmers as a whole.”
Singh however said that the recent announcement about recapitalisation of public sector is much needed and welcomed it.
Meanwhile, in a series of tweets, Gujarat chief minister Vijay Rupani criticised Singh and questioned his silence as prime minister when his government was accused in a series of scams.
“As PM of the most corrupt government in India’s history, shouldn’t Dr. Singh apologise to 125 crore Indians?” Rupani tweeted.
Earlier in the day, Singh in an address on the current economic scenario at the Sardar Vallabhai Patel Rashtriya Smarak in Ahmedabad said: “Tomorrow will mark exactly one year since the disastrous policy of demonetisation was thrust on the people of India. I say with immense pain and a sense of responsibility that 8 November was a ‘black day’ for our economy.”
In his speech he also said that the India’s imports from China at Rs1.96 trillion in the first half of 2017-18 saw an increase of more than Rs45,000 crore as compared to the same period in 2016-17.
“This unprecedented increase of imports, which is more than 23% increase in a year, can be attributed largely to demonetisation and GST. These twin blows damaged India’s MSME (micro, small and medium enterprises) sector and our businesses had to turn to Chinese imports at the cost of Indian jobs,” he said.